ExxonMobil to phase out Russia operations

ExxonMobil on Tuesday announced it would discontinue operations of a key oil and gas project in Russia, as well as halt any further investments in the country, in response to the nation’s invasion of Ukraine.

In a press release, ExxonMobil said it would begin “developing steps to exit” the Sakhalin-1 project, which produces offshore oil and natural gas around Russia’s Sakhalin Island.

ExxonMobil said the decision was made because it “supports the people of Ukraine as they seek to defend their freedom and determine their own future as a nation.”

“We deplore Russia’s military action that violates the territorial integrity of Ukraine and endangers its people,” the company said in the press release. “We are deeply saddened by the loss of innocent lives and support the strong international response. We are fully complying with all sanctions.”

ExxonMobil operates the oil and gas project, which is estimated to have 2.3 billion barrels of oil and 17.1 trillion cubic feet of natural gas in reserves, according to company data.

The oil and gas company has a 30 percent share in Sakhalin-1, while two Russian affiliates have a combined 20 percent stake. A Japanese consortium and an Indian oil and gas corporation also have stakes in the project.

ExxonMobil joins other energy companies, including BP and Shell, in cutting ties with Russia after it invaded Ukraine and launched a full-out assault on its neighbor last week.

Russia also lost another major energy investment when President Biden announced sanctions on the Nord Stream 2 Pipeline to Germany.

ExxonMobil will not invest in any new projects in Russia, according to the release.

The company indicated it could take time to pull out of the Sakhalin-1 project, as executives must work with partners to wind down operations.

But ExxonMobil said it was the right decision to make.

“As operator of Sakhalin-1, we have an obligation to ensure the safety of people, protection of the environment and integrity of operations. Our role as operator goes beyond an equity investment,” the release said.